Outstanding UK commercial property debt is on course to fall to a 10-year low, according to De Montfort University.
The amount of unrepaid debt fell by 1% in the first half of this year to 拢163.7bn (鈧�226m).
De Montfort鈥檚 report said strong levels of new loan origination mean that the total amount could increase, however, for the first time since the recession.
The half-year edition of the De Montfort Commercial Property Lending Report concludes that the decline in total real estate debt since 2008 鈥渁ppears to have almost halted鈥� and could be reversed by year-end.
The value of new loan originations in the first half of this year was 拢24.7bn. This was the highest half-year value reported to the research since 拢49.2bn recorded for the first six months of 2007.
The value of distressed loans fell from 拢23.2bn at year-end 2014 to 拢15.7bn at mid-year 2015.
Ion Fletcher, director of policy at the British Property Federation, said: 鈥淲e seem to have reached a turning point in the amount of commercial property debt in the market, with the impact of post-crisis deleveraging almost totally cancelled out by new lending.鈥�
The proportion of loans with a loan-to-value (LTV) ratio of less than 70% has continued to grow in the first half of 2015, representing 80.5% of the 拢135.5bn of outstanding debt of traditional lenders and allocated to investment projects. Outstanding debt with an LTV ratio of between 71% and 100% fell from 14.3% of the total, (拢20bn) at year-end 2014 to 12% (拢16bn) at mid-year 2015.
Interest rate margins for senior debt continued their three-year long decline. However, De Montfort said the pace of decline moderated considerably. The report suggests that that 鈥渢he floor in interest-rate margins may have been reached鈥�.
Following a surge in non-traditional lenders in 2014, UK banks and building societies remained the dominant lenders in the market, holding 76% of all loan originations at half-year 2015, compared to 75% at year-end 2014.
